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« Silver & Gold - The BIG Picture - Mike Maloney | Main | Hard Assets Investor Interviews Hard Assets Alliance »
Tuesday
May212013

Silver Wheaton Tarnished By Metals Bear Market

With gold and silver prices falling off a cliff in 2013, it’s not surprising that earnings estimates are being cut for the miners. Silver Wheaton , one of the largest streaming metals companies in the world, is no exception. Ten earnings estimates for 2013 have been cut in the last two months, sending the consensus plunging for the year.  Shares of Silver Wheaton are soaring more than 4% Monday but don’t get too thrilled about the longer term picture.

Silver Wheaton is not a mining company but streams the precious metals. That means it enters agreements where it has the right to purchase all or part of the gold or silver production from mines around the world.  The payment is up front, which means its costs are mainly fixed. It doesn’t actually do the exploration or have to deal with employee issues like union contracts. It looks for politically stable regions.

Based upon current agreements,

the company has forecast 2013 production of 33.5 million silver equivalent ounces and 145,000 ounces of gold. Silver Wheaton expects to grow production to 53 million silver equivalent and 180,000 ounces of gold by 2017. It doesn’t hedge its gold or silver production.

On May 10, Silver Wheaton reported first quarter results and missed the Zacks Consensus by 4 cents. Earnings were 37 cents compared to the Zacks Consensus of 41 cents. The analysts had overestimated the sales of the metals. Silver sales were down 19% quarter over quarter with gold sales down 49%. Revenue managed to edge up 3% to $205.8 million.

To read this article in full please click here.


With gold, silver and Uranium stocks being out of favor one must decide if this is a problem or an opportunity. We have steadfastly refused to buy gold and silver mining stocks for the last two years and as evidenced by the HUI we feel that our decision to hold back has been vindicated. The damage done to the mining sector may not be over yet but this demise is starting to offer up some exciting opportunities in my view.

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